Tag: tokenization

Prometheum – post-hearing buzz

Ever since Tuesday‘s House Financial Services (HFS) Committee meeting on the market structure and stablecoin bills, the participation of Aaron Kaplan, Founder and Co-CEO of alternative trading system Prometheum, has been the talk of Twitter. His support of the Securities and Exchange Commission’s (SEC) approach to digital asset regulation, i.e. enforcement, and his company’s business model are getting the “side eye.”

The top line is: what is really behind the strategy for the Prometheum trading platformm which doesn’t even trade Ethereum or Bitcoin? Did Democratic HFS members not realize what they were stepping into with Prometheum? Some of Kaplan’s answers felt scripted… by someone not Kaplan.

Beyond Rep. Mike Flood (R, NE) admonishment of Kaplan at Tuesday’s hearing, Matt Walsh of crypto venture firm Castle Island breaks down the mystery in a Twitter thread that has seen nearly 3.5 million views as of publication.

Walsh begins: “In the midst of the SEC bringing cases on Coinbase + Gemini, and giving the stiff arm to Robinhood and others, Prometheum gets approval for a first-of-its-kind Special Purpose Broker-Dealer (SPBD) for digital asset securities… Then Prometheum’s CEO somehow gets a seat in front of Congress yesterday and starts reading off pre-written notes clearly coordinating narratives with Democratic members of Congress (or the SEC).”

Prometheum – scripting

The Prometheum mystery is reminiscent of the SEC’s Investor Advisory Committee and it’s April 6 letter which neatly (or clumsily) recommended to SEC Chair Gary Gensler that his agency continue to do exactly what it’s doing with its digital assets strategy of regulation by enforcement. This was in spite of a healthy list of committee members who must have some differing opinions including IAC’s Chair, Christopher Mirabile, who said he supported a regulatory framework for digital assets in December. Read more about it. Continue reading “Prometheum’s Hearing Appearance Getting Scrutiny; Polygon’s New Use Case Database”

FSOC, stand down please

House Financial Services (HFS) Chair Patrick McHenry (R, NC) wasted no time after his HFS committee hosted U.S. Treasury Secretary Janet Yellen on Tuesday.

Yesterday, he sent Secretary Yellen a letter that began, “I am writing to express my strong concerns with actions taken by the Financial Stability Oversight Council (FSOC) this past April seeking to make it easier to subject nonbank financial companies to prudential supervision by the Federal Reserve. The actions are contrary to the due process protections afforded by the Constitution and mark a sea change in the longstanding principles the Council uses to review these entities.” See the letter.

McHenry wants Secretary Yellen to “revisit [FSOC’s] April decision to evaluate risks posed by non-bank financial entities based on size, rather than the activities they undertake.” Read the release.

And, read the U.S. Treasury press release for “Financial Stability Oversight Council Meeting on April 21, 2023.”

more tips:

Meanwhile, Politico reports that McHenry wants to put the market structure bill up for a vote after July 4 in spite of Democratic push back. Read a bit more. Continue reading “McHenry Requests Secretary Yellen Rein In FSOC; Flyover Fintech In August”

Hinman on crypto -or not

At long last, “certain documents” from William Hinman, the former director of the U.S. Securities and Exchange Commission (SEC)’s Division of Corporation Finance from 2017 to 2020, have been released. Amidst the Ripple lawsuit by the SEC, pro-Ripple forces believe his public statements around what makes a cryptocurrency a security were misguided and, indeed, disputed internally at the SEC.

The story starts with a speech Hinman made in 2018 at a “Yahoo Finance All Markets Summit: Crypto.” See it.

“Prior to making the speech, Hinman said in an email to multiple SEC employees that the speech suggests ‘we do not need to see a need to regulate Ether, as it is currently offered, as a security,'” according to The Block, which concludes, “The public release of the Hinman documents may ignite a significant debate about the classification of cryptocurrencies as securities…” Read more.

The upshot of the Hinman notes from pro-crypto forces: Congress needs to step up with regulation. Continue reading “Hinman Documents Released; Market Structure Bill Seeks Bipartisan Support”

Gensler – speaks

In a speech before the Piper Sandler Global Exchange & Fintech Conference in Washington, D.C., Securities and Exchange Commission (SEC) Chair Gary Gensler gave perhaps his most prolonged defense of the his position on crypto and its oversight – which is especially relevant given last week’s enforcement actions against Binance and Coinbase.

On staking-as-a-service, which has been popularized on the Ethereum blockchain, he sees only a security: “It doesn’t matter what kind of assets investors put into a lending or staking-as-a-service platform-cash, gold, bitcoin, or anything else. It’s what the intermediary says that they are going to do with the assets that determines what protections are provided by the law. Customers invest their assets with the platform, which then onlends them or pools and stakes them, in each case promising a return. These are classic securities, irrespective of whether crypto is involved.” Read the speech. Continue reading “Gensler Makes Impassioned Crypto Speech; House Republicans Seek His Removal”

tomorrow’s hearings

With the United States digital assets ecosystem in the dumps following the Securities Exchange Commission’s (SEC) lawsuits against Coinbase and Binance, tomorrow’s House Financial Services hearings could offer some uplifting highlights.

Morning – At the 10 a.m. hearing, what’s Treasury Secretary Janet Yellen thinking about digital assets legislation? She told CNBC last Thursday she wants to see legislation. To which some Members may ask at tomorrow’s hearing,  “What exactly are you looking for, Madame Secretary?” See the hearing page. The Committee Memorandum notes that particular focus will be on the International Monetary Fund (IMF).

Afternoon – Beginning at 2 p.m., the stablecoin (PDF) and market structure (PDF) bills being pushed forward by Republicans will be the subject of the afternoon hearing.  See the hearing page.

tomorrow’s hearings – Dems

The big question is where House Democrats will land on these bills. Continue reading “Digital Market Structure And Stablecoin Hearing Tomorrow, RFIA Returns This Month”

out-of-reach

Hong Kong-based Animoca Brands is glad it made a bet on non-US jurisdictions for its crypto token project says an article in the South China Morning Post. The company’s Sand token was named a security in this week’s SEC lawsuits against Binance and Coinbase. The Post explains, “Sand is the native crypto token used by Animoca’s metaverse platform The Sandbox, and it was one of more than a dozen such tokens to have been explicitly named by the SEC as securities, with others including Solana, Polygon and Mana, the token used in the Decentraland virtual world.” Read it.

regulating crypto ads

Saying its issuing “tough new rules” for advertising cryptoassets, the United Kingdom’s Financial Conduct Authority (FCA), the equivalent of the Securities and Exchange Commission (SEC) in the U.S., said that the new rules will go into place this October and ban such marketing tactics as “refer a friend.” Overall, the agency hopes that the introduction of what it’s calling a “cooling off period” will give investors pause before diving into what the FCA sees as highly speculative investing. Read the announcement. And, get the rules (PDF).

Read a summary from CoinDesk. Continue reading “Choosing Offshore From The Get-Go; UK Regulating Crypto Ads”

Treasury speaks

U.S. Treasury Secretary Janet Yellen appeared on CNBC’s Squawk Box yesterday and talked crypto after the recent enforcement actions against Binance and Coinbase. She said, “[Treasury recently] wrote a set of reports in response to the President’s Executive Order to examine the risks inherent in crypto. And we identified a number of risks – some of which – risks to consumes, investors – our laws are already strong. The SEC, The CFTC, other regulators have the ability and tools to protect consumers and investors. I’m very supportive of seeing those agencies use the tools they have. (…) I see some holes in the system where additional regulation would be appropriate. We’d like to work with Congress to see additional regulation pass.” See it.

intro to crypto

A new publication,  “Introduction To Cryptocurrency,” hit the Congressional Research Service database in late May. “Currently, there is no comprehensive regulatory framework for crypto, but regulators may apply existing regulatory frameworks when applicable to crypto,” writes author Paul Tierno, an analyst in financial economics at CRS. Download it (PDF).

Tierno explains several key policy issues facing Congress including: “The regulatory policy debate has focused on whether a regulatory regime that is tailored for crypto is necessary. Other key policy issues can be summed up in three unanswered questions: Is the current authority sufficient, or is congressional action required? If new regulatory authority is required, who should be the primary regulator? Is it better to create a new, overarching structure, or is a refinement of the existing framework sufficient?”

Tierno also wrote the lengthy and detailed “Cryptocurrency: Selected Policy Issues (PDF)” which was released in February. The new “Intro To Crypto” appears to “peel out” a digestable version of his February tome.

europe salivating

In the wake of the U.S. regulatory crackdown on digital assets, Europeans are beginning to salivate at the potential to tilt the global economic order their way. Joachim Schwerin, a principal economist in the European Commission’s department responsible for economic growth tells CoinDesk, “What we hear from businesses is that now a lot of them are looking to grow, to stay safe, and to manage their risks. (…) They don’t know what will happen in the U.S., so they come to us. This is good for us, this is good for competitiveness.” Read more. Continue reading “Secretary Yellen On Crypto: Additional Regulation Would Be Appropriate”

SEC charges Coinbase

Coinciding with another round of hearings aimed at creating legislation for digital assets – and Monday’s action against Binance – the Securities and Exchange Commission (SEC) delivered an enforcement action against Coinbase. The agency said in a statement that Coinbase was “operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency.” The SEC also charged Coinbase for “failing to register the offer and sale of its crypto asset staking-as-a-service program.”

Read the statement. And, see the 101-page lawsuit (PDF).

The suit was not unexpected given the “Wells notice” Coinbase received in March suggesting an enforcement action was on the way.

It was only two years ago that Coinbase’s registration statement allowing it to go public was approved by the SEC.

SEC charges Coinbase – states

The lawsuits for Coinbase didn’t stop with the SEC yesterday either. Though likely well-coordinated with the securities agency, “a multistate task force comprising state regulators from Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington and Wisconsin have issued a Show Cause Order against cryptocurrency exchange Coinbase,” reports Cointelegraph. Note the inclusion of both “red” and “blue” states in the group.

“The Order gives Coinbase 28 days to show cause why they should not be directed to cease and desist from selling unregistered securities in Alabama” and in coordination with the other states mentioned. The action stems from the Coinbase’s staking rewards service says the Order. Read the order (PDF). Continue reading “SEC, States Aim Enforcement Actions Against Coinbase; SWIFT Testing Tokenized Asset Systems”